Inside The Downfall Of iiNet Sydney

Image: iiNet

TPG currently stands as the second largest internet service provider (ISP) in Australia and is a force to be reckoned with in the telecommunications industry. Its rapid growth is mainly attributed to strategic acquisitions it has made in recent years. One of those acquisitions was iiNet, an ISP that boasted high customer satisfaction rates and was well-respected in the telco community.

It has been over a year since TPG bought iiNet and the situation looks bleak for the ISP that was once the darling of the telco industry. Most recently, iiNet's Sydney office was shut down and most of the staff were made redundant. We spoke to former iiNet employees to get the insider story on the aftermath of the TPG acquisition. We also spoke with iiNet to get its side of the story.

Conflicting values

TPG completed its acquisition of iiNet for $1.56 billion late last year. At the time the acquisition was announced, questions were raised over how iiNet's culture and operations would be impacted.

The Perth-based ISP was founded in 1993 by Michael Malone and Michael O'Reilly in a garage. Despite the company's rapid growth, iiNet held on to its relaxed and open attitude not only towards staff, but to customers and the media as well. iiNet's executive team were approachable and outspoken about industry topics even if it ruffled a few feathers. The company was also undeniably skilled at providing good customer service, which has been well-documented.

Meanwhile, TPG was a low-cost ISP and had garnered a less-than-desirable reputation, racking up a long list of customer complaints. You sign up to TPG not because of its customer service, but because the internet packages were dirt cheap. TPG CEO, David Teoh, was a notoriously reticent and reclusive man who rarely gave interviews. Today the telco is a force to be reckoned with, having snapped up PIPE Networks, the business arm of AAPT. It now owns a 100% stake in iiNet, one of the most well-loved ISPs in the country.

While it made sense for TPG to grow through acquisitions, there were concerns about the future of iiNet. The two companies held completely different values on a number of industry issues.

For one, iiNet has been willing to protect customers from big Hollywood studios that wanted to sue them for alleged copyright infringement. It has gone to court to do so, refusing to bend to studios' requests to send infringement notices to subscribers and refusing to surrender information on suspected content pirates.

Meanwhile, TPG was happy to send infringement notices to customers suspected of pirating copyright material.

iiNet was vehemently against data retention laws the Australian Government introduced earlier this year. TPG remained silent over the matter.

iiNet had been eager to ingratiate itself with customers to build up trust in the brand. TPG doesn't seem too worried about that. At the time of the acquisition, there was apprehension over how the buyout would impact iiNet's loyal group of customers and its team of dedicated employees.

Malone, who left his post as iiNet's managing director in 2014 but remained a shareholder of the company, was opposed to the acquisition.


iiNet has offices in nearly every capital city in Australia. When news of the TPG acquisition was made public, iiNet staff were reassured by both the management and human resources teams that it would be business as usual.

Commentators in the telco industry had already noted that it would be a bad idea for TPG to make changes that would tarnish iiNet's stellar reputation. iiNet was the premium brand here and it was best it remained that way.

But changes started happened at the beginning of 2016. A source from iiNet's Sydney office told Lifehacker Australia that it began with small changes, mainly cost cutting. Customer service members were no longer able to apply credit to customer accounts without approval from upper management; they had previously been able to offer $50 without seeking approval.

iiNet general manager of customer service Matt Conn spoke to Lifehacker Australia about the changes.

"There has to be a balance with our credit policy," he explained. "Fixing the root cause of a problem instead of applying credit to appease a customer is something we're focused on."

According to our source, major changes didn't kick-off until March. Teams in the Sydney office were being shut down every few weeks and some members were shuttered over to TransACT, a division of iiNet that maintains the VDSL network in the ACT and the HFC network in parts of Victoria.

iiNet's Sydney office was down-sized as well. Staff were moved from a newly furbished modern office on Market Street in the CBD to a smaller premises on George Street nearby.

Local customer service roles were increasingly being shifted to overseas call centres, mainly in South Africa. Up until that point, overseas call centres were only supposed to provide support outside of Australian working hours.

Customers noticed the difference.

"Our Net Promoter Score (NPS), used to measure customer satisfaction with a company, started to drop dramatically and customers started to complain about bad customer service," the source said. In fact, the TIO documented a whopping 48.2% jump in complaints against iiNet this year.

Conn refuted this claim, stating that the company's NPS has remained consistent and is currently at 54. However, iiNet's NPS was well over 60 - closer to 64, according to our source - back in 2014.

Some iiNet employees left of their own accord, fed up with the constant changes and uncertainty that TPG had brought in. At one point, over a two-month period, there was only one person in the iiNet Sydney office taking customer service calls.

The Sydney office began to empty out and by the time it was completely shut down on December 2, only a skeleton staff remained - 30 employees were manning the fort, down from around 200 just over a year ago, according to our source. They had been moved to a smaller office formerly occupied by staff from AAPT, another one of TPG's acquisitions.

iiNet's reason for closing down the office was that it had always been predominantly a contact centre site and natural attrition led to a smaller team, which made it difficult to manage, Conn said.

In TPG's Annual Report released in September this year, Teoh had this to say about iiNet:

"While there is still much to do, I am pleased to report that the integration is progressing well. Employees from both sides of the merger have risen to the challenge of the integration and have continued to deliver the premium levels of customer service for which iiNet has gained a strong reputation."

That sentiment was not shared by iiNet's Sydney office. On November 25, just a few weeks before Christmas, the remaining workers at the Sydney office were told that they were being let go.

Conn said that he spoke to each employee directly about the office closure and that iiNet had tried their best to offer roles to the remaining staff but most of them refused the opportunity.

"We still had several roles that weren't filled; there were a substantial number of roles and we wanted to attempt to retain most of the staff. There was almost enough roles to fit office," he said. "The benefit of iiNet becoming a part of a bigger group [TPG] is that that there are more opportunities available.

"We were committed to retain as many staff members as possible."

iiNet was even willing to consider creating new roles for the remaining staff, internally or at other TPG-owned companies, to ensure all the staff had a chance to remain with the business.

Our source refuted Conn's claims.

"I don't know about other staff but I never had a conversation with Matt Conn," our source said. "The majority of roles offered through to us were roles well above what we were suited for (high-level tech and managerial positions) and even the people who were suited for manager roles had a hard time getting them. Our team senior was knocked back for a management role though he had been doing it for years."

The Future Of iiNet

Our source suggested that the Melbourne iiNet office will also be shut down shortly. Lifehacker Australia questioned Conn about whether there were any plans to close other offices around the country.

"We have to constantly review operational structure, but there are no immediate plans for anything," he said. "However, in saying that, we are reviewing all parts of the business. It will depend on timing and the number of available roles; our focus is on redeployment."

We pressed him further on whether there were any discussions about closing down the Melbourne office.

"The Melbourne branch does specialist tasks for us; right now, that is the focus for them," Conn said. "There are roles with in the [TPG] group that are open to staff, depending on how it all plays out. Today, Melbourne is a key part of our business."

However, a former employee from iiNet's Melbourne operation told Lifehacker Australia that the company had sent out an official email internally to informed staff that the office was to be closed down and the remaining staff would be moved to TPG's offices in Richmond, Victoria. Lifehacker Australia was unable to verify this because our source no longer had access to his former work email account. We have contacted iiNet again for additional comment.

Our source from the Melbourne office claimed that before he left, a huge portion of the staff had already been culled and office perks such as fresh fruit and coffee machines had been taken away from the break room.

"From a technical staff point of view, no major changes were allowed due to TPG management, which meant that project work and improvements had been thrown to the wayside which effectively turns engineers and admins into zombies, firefighting the same occurring issues over and over again," our source said.

Our source from the Sydney office speculated that most of the 3000 staff are in overseas contact centres and highlighted that the page hasn't been updated for some time. Right now it seems like a relic of iiNet's golden days.

"The worst part is not that we are losing our jobs; we will bounce back," our source said. "It's the loyal iiNet customers who will suffer the most out of all of this. It need to be known that iiNet is just TPG wearing the shredded remains of iiNet's skin and taking advantage of (a quickly disappearing) reputation to gain customers."

Conn, on the other hand, believes iiNet has benefited a lot from being a part of TPG.

"In the last 12 months, we've released new products that have been beneficial to our customers and that is a positive thing that is overlooked at times," he said. "There is a heavy focus on our network stability, which has increased, and there are other products that TPG have that we can take advantage of.

"Being part of the bigger group, I honestly believe, brings benefit to our customers."


    From an ex long time standing IINet customer, their customer service and knowledge from the help desk is abysmal. They have no basic grasp of how the internet works and after two TIO complaints from me in the last 6 months, I am now a happy customer with a different internet company who understands what customer service is all about.

      Hi Ironian,

      I have had the same dehumanising experience and would love to move providers. But I gave up looking thinking all Telco's were the same. So Who is your provider? Who not provides customer service? Thank you

    Why is anyone suprised at this? The writing was on the wall as soon as they announced that TPG was buying iiNet... Things were guaranteed to change, it was only a matter of time before "management" happened.

    It's a real shame, even though I thought it unlikely, I was hoping they'd just start using the TPG network but keep letting iiNet do it's own thing from the customer service side.

    I'm with Internode (which is owned by iiNet and therefore TPG) but haven't had to use the customer service in the past year. I'm hoping not much has changed on that front yet.

    As a former Sydney staff member, I can confirm I did have a conversation with Matt Conn. I can't fault his handling of the closure. As the source mentioned, the roles offered were well above what most of us were qualified for.

    "iiNet was even willing to consider creating new roles for the remaining staff, internally or at other TPG-owned companies, to ensure all the staff had a chance to remain with the business." - I expressed directly to HR a desire to continue working for the company, and at no time was I offered anything. The only thing I heard about this was one staffer was offered a job writing documents. ie writing instructions on everything manilla didn't have down yet, because they directly replaced us and were still asking questions an hour before our doors closed.

      I don't remember anyone named Dan Murphy from iiSydney.... :D

      Heaps of people were offered jobs, I could name names but want to remain anonymous and don't want to give away too much.

    I look forward to welcoming our Melbourne iiNET brothers to Richmond

      Yeah, I hear there's a fair bit of free office space available at 180 Burnley Street thanks to 'efficiencies' found by a previous acquisition...

    As an industry insider, thank you for reporting this. This was clear-as-day obvious to everyone in the industry, since TPG has a lot of experience and a very predictable way of acquiring companies. There was little doubt iiNet was to go the same way AAPT did before it.

    Now would be a good time to point out that both TPG and iiNet made all sorts of assurances prior to the acquisition to convince staff and shareholders agree to the move. Some were even written in the agreement I believe, but everybody knew they weren't worth the paper they were written on.

    We have been a long term Pipe customer at work but since our account manager was moved on last year, we got a new account manager - an ex AAPT guy. He has no idea about products and consistently refers to AAPT terms that we don't understand. That is when we can even reach him anyway. If you send an email to somebody, typically you get an autoresponder from a TPG address, then somebody from AAPT responds and forwards you to somebody else at TPG. You have no idea who it is you are actually meant to be dealing with.

    Their customer service is shockingly poor these days, when previously our Pipe account manager was excellent.

    I'm an Internode customer at home and thankfully haven't had to call for support recently.

    I have been a customer since 1996. I have had my fill of this bad customer service. I am currently looking for a new ISP. TPG have really done a good job on Iinet . They have destroyed it.

    We had been with iiNet since 2005. Customer service, whilst at times hard to reach, was always friendly and efficient. As soon as the TPG deal was signed, we started looking at other options and after one last call to iiNet sales, who were disinterested in keeping us as a customer, we left. TPG is not getting its hands on our money....

    The same thing is also happening to Internode - they are now in the process of replacing all level 2 provisioning and faults staff (about 50 staff) with an overseas call centre in Manilla - who they have admitted have no technical knowledge about Australian Infrastructure.

    But hey, they will get 1 month's training, so they should be fine. When we raised concerns, we were told that TPG could replace 1 of us with 10 of them for the same cost and laughed off.

    Some are quitting, and some have gone back to level 1 support - which will probably be replaced by Manilla as well soon anyways.

    The regional networks team (who manage the SA WiMAX network) have lost half it's staff, and TPG refuse to replace them. TPG refused to pay WiMAX contractors for months - until they refused to do any more jobs. One of the contractors almost went belly up because of this and simple jobs were delayed for well over a month.

    Staff morale is at a critical low - no matter what Matt Conn-Job says.

    If your with Internode, iiNet or Adam Internet - get out while you still can, things are only going to get worse as TPG tightens the purse strings.

    - Ex Node Staff Member.

      Where does one go? There's basically no choice or real competition left.

      121 POI decision has meant there's Telstra (worst monopoly ISP ever), Optus (completely innefective outside of mobile these days), and TPG (budget ISP which pushes the boundaries of how far it can piss off customers to lower costs before it forces them to move etc). Rest are basically resellers.

      There's a few small fish if you're lucky and on NBN but even then its pot luck if you run into CVC issues with them due to again 121 poi :(

      Maybe the new singaporean mob will have a decent crack but its been a bumpy start I hear (and again you have to be 'lucky' enough to be on NBN).

      GG ACCC because you basically allowed an oligopoly to occur on your watch!

      Yep, I just experienced the Manilla call centre trying to get rectification of a FTTN provision error for my parents address.
      NIL security checking, NIL confirmation of who I was, was unable to repeat my phone number the list goes on.

      Hung up, called back, played telephone lotto and managed to snag someone in Adelaide faults who apologies multiple times and had the issue fixed in 30 seconds.

      I'm with iiNet at home and I have to say that most of the time Capetown is just as frustrating.
      The most frustrating thing is that I am 32, technically literate and well travelled. However I know how frustrating it would be for my parents/neighbours to call up and receive rubbish support.

    What gets forgotten in all this is, two once great Adelaide success stories, Adam Internet and Internode hove now been completely gobbled up and disintegrated as part of this.

    "Today the telco is a force to be reckoned with, having snapped up PIPE Networks, the consumer arms of AAPT. It now owns a 100% stake in iiNet, one of the most well-loved ISPs in the country"

    When AAPT was sold TPG got the commercial side, iiNet got the residential.

    ""There has to be a balance with our credit policy," he explained. "Fixing the root cause of a problem instead of applying credit to appease a customer is something we're focused on.""

    This actually makes sense, too many staff were giving away credits just to shut the customer up, I even told freinds to call up at certain times of the day to speak to certain call centres where you were more likely to get a credit.

    "At one point, over a two-month period, there was only one person in the iiNet Sydney office taking customer service calls."

    More like half a person (she was very short).

      Right you are. I've fixed the reference to AAPT to reflect that. Sorry about that.

      As for iiNet's credit policy, I think Conn made a valid point but it also takes away the autonomy staff previously had.



    Long time user 8.5yrs of iinet. Will be seeking a change very soon. TPG butchery of tech support criminal.
    I have been using the internet for eions of time. Back when ARPNET was the rage and a 14.5k modem was fast.
    Have spoken to many many tech support people over this time. Every one of them had more knowledge than the current breed at TPG.
    I thought I might have gone senile it is good know I have not.
    My experiences with TPG tech support is more akin to telemarketing. They always come back with same solution... the problem is not ours.... Let us send out a technician to check the copper wire to the exchange and stuff around your home.The likely fee for this is $35/15 minutes. Plus $199 call out. Yet they cannot provide credible evidence there onsite tech support is any better than themselves.

    TPG did what it does best, buy successful going concerns, absorbs its data base and then strips the acquisition back to bare bones before finally discarding it.

    We have iiNet, an Australian ISP start-up, do well, achieve so much for the industry in general and its staff and provide a great work ethic, now go down the drain when greed takes over and good business practices go out the back door, together with highly trained staff.

    How the mighty have fallen, and through no fault of the staff, junior or middle management. Blame the greed of the board and its shareholders.

    After being a loyal iiNet customer for over 10 years, with several moves within same city, moves to regional areas and finally interstate, I always found the customer service, be it Sydney, Melbourne, Perth, Auckland or Cape Town to be first class, the leader in how it should be done,.

    However, since TPG took control, that view has changed and iiNet is now ranked as a distant also ran in the customer service stakes. From resolution in 1 phone call, to multiple contacts and still waiting for resolution 3 months later. From a 5 minute maximum wait in the queue to a minimum of 1 hour and forget call backs now, my last one took 2 hours to call me back, then they hung up.

    NBN has been available in my street for just over 6 weeks. NBN.Co, Telstra, Optus and 3 local ISP have all confirmed this to be correct and want my business. Yet iiNet keeps telling me its not available so wont connect me and nothing to do with available ports either.

    So I am moving to another non-associated provider, thus becoming yet another dissatisfied or disillusioned customer, that iiNet cared for but TPG cant be bothered with.

      I've been with iiNet for 11 years, and have a partner who works for them. As soon as TPG bought them, bandwidth was throttled. This may not have been noticeable to our eastern states friends, but here in W.A. it was immediate and dramatic. This was not just the shitty connection we get for being 4km from the exchange. (We are 3 streets from the NBN... with no slated time for them to get to us.)

      A few months ago the house down the road was demolished... and with it the Telstra pit. I tried to get iiNet support to send VisionStream (should be called UrineStream as it more accurately reflects their effectiveness.) I was told I had to wait until business hours (this was Saturday morning.) Thankfully one of my neighbours, being an old fart, is a Telstra customer, and they sent someone out within the hour. He looked at the scale of the destruction and his supervisor decided not to rack up that many overtime hours... told him to come back Monday.

      I didn't get a call from UrineStream until Monday afternoon... they had NOT been told that the pit was destroyed by earth-moving equipment. Nice lady said she'd speak to Telstra and call me back... nope, no call back. No call back from iiNet... but apparently my ticket was closed without even checking that I was satisfied and my service restored.

      South African support is AWFUL. Their training is inadequate and they are strict customer service script-kiddies. You can't deviate from the script. This is something I helped Optus address when they LAUNCHED in 1993 or so... the Americans wanted script-driven customer support, and we convinced them Australians wouldn't like it. I'm still right more than 20 years later...

      Finally, morale inside iiNet is awful. This happens when your CEO in all his 1950s management wisdom thinks banning people wearing headphones at work is a good idea. Never mind removing all the perks, leaving equipment in the shared kitchens unrepaired, etc. etc. etc. (as per other's comments.) Teoh is in no way qualified to run a cafe let alone an ISP, unless you are a shareholder and only worry about short term profits... because long term this company is an unmitigated disaster waiting to happen.

      So... after YEARS of avoiding Telstra like the plague (and my dad used to work for them!)... I'm thinking of going back. Why? Because they might be willing to fix the mess they made when they restored that comms pit and give me reliable ADSL again.

    Like many other long-term iiNet customers, I am completely disillusioned since the takeover by TPG. iiNet used to be a very good ISP with excellent helpdesk support (Auckland, Sydney, Perth & Cape Town) and reasonable wait times. Now everything gets routed through Cape Town, you constantly struggle to understand what is being said due to heavy accents & background noise, wait times are always long & nobody ever calls you back when they promise. In short, under TPG ownership iiNet is now a complete joke. I would leave in a heartbeat if there was a "new" iiNet to move to but therein lies the problem...

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